A Century of Education Spending

Education Spending started out at the beginning of the 20th century at one percent of Gross Domestic Product (GDP). It increased rapidly during the first three decades, reaching a peak of 4 percent of GDP in the depths of the Great Depression, but then steadying at 3 percent till the advent of World War II.

During World War II, education expenditures declined to 1.25 percent of GDP in 1944, and then recovered after the war to over 3 percent of GDP before declining in the early 1950s.

In the mid 1950s education spending began a rapid increase, from a low of 2.6 percent in 1953. Education spending peaked at 5.7 percent in 1976 before declining for the next decade to 4.7 percent of GDP in 1984.

In the mid 1980s education spending began to increase again. It flatlined at about 5.3 percent of GDP in the 1990s, but resumed its growth in the 2000s, reaching 6.1 percent in 2010 before declining a little in the aftermath of the Great Recession.

Education Spending by Government Level

Local education spending: Education spending has always been dominated by local government. Local government spending started at about one percent of GDP at the start of the 20th century and then steadily expanded, with departures caused by the Great Depression and World War II, peaking at 3.8 percent of GDP in 1975.

Chart Key: - Local direct spending - State direct spending - Federal direct spending - Transfer to state and local

From the mid 1970s to the mid 1980s education spending at the local level declined to about 3.2 percent of GDP by the mid 1980s. Then local education began a steady rise, breaching 4 percent of GDP by 2002 and cresting at about 4.3 percent of GDP by 2009. In the first half of the 2010s, local education spending
declined to an estimated 3.1 percent GDP in 2015.

State education spending: Education spending at the state level was minimal at the start of the 20th century, but grew to 0.2 percent of GDP by the mid 1920s.
In the 1930s state education spending increased to about 0.4 percent of GDP before shrinking during World War II.

After World War II state education increased and stabilized at about 0.4 percent of GDP in the 1950s. In the late
1950s state education began a surge that ended at 1.4 percent of GDP in 1976. State education spending
declined to 1.2 percent of GDP in 1984 and then began a slow increase, reaching 1.5 percent of GDP in the late 2000s, and jumping to 1.7 percent GDP in the post-recession year of 2010.

In the first half of the 2010s state education spending declined, down to an estimated 1.58 percent GDP
in 2015.

Federal education spending: The federal government had little involvement in education in the early 20th century. This changed in the 1930s when federal education spending increased from less than 0.05 percent of GDP to over 0.3 percent of GDP. Federal education spending decreased
during World War II but then increased to a peak of 1.03 percent of GDP in 1949 as it funded education for veterans in the GI Bill. Federal education spending declined in the 1950s to 0.3 percent of GDP, but began an increase in the mid 1960s reaching a peak of 1.2
percent of GDP in 1979. Thereafter federal education spending declined to about 0.6 to 0.7 percent of GDP in the 1980s and 1990s before increasing modestly to nearly 0.8 percent of GDP in the 2000s.

In the early 2010s federal education spending declined to 0.6 percent in 2014, and is expected to recover
to 0.68 percent GDP by 2020.

Education Spending by Education Type

At the start of the 20th Century, education spending was almost exclusively for K-12 education.

Government education spending in the first half of the 20th century was almost exclusively for childhood education, K thru 12. In 1950,
spending was 2 percent on K-12 and 0.37 percent of GDP on higher education. But then the higher education share began to grow. At the peak of education spending in the 1970s, K-12 spending was 3.9 percent of GDP and higher education was 1.44 percent of GDP. Thus K-12 spending had doubled as a percent of GDP and higher education spending had just about quadrupled in 25 years.

Since the 1970s higher education has increased its share a little. K-12 education spending ended up at about 4 percent in the 2000s and higher education spending rose to 1.6 to 1.7 percent of GDP.

In the Great Recession K-12 education popped up to 4.4 percent GDP before declining below 3.8 percent GDP in 2012. Further declines are expected in the remainder of the decade. Higher
education spending is expected to increase to 1.84 percent GDP by 2015 and decline to 1.7 percent
GDP by 2020.

Data Source

On June16, 2015, the Congressional Budget Office released its annual Long Term Budget Outlook for 2015, which projects federal spending and revenue out into the 2080s. As before, the CBO study shows that federal health-care programs will eat the budget, with federal spending exceeding 35 percent GDP by the end of the century while federal revenue stays below 25 percent GDP.

UsGovernmentspending.com has updated its chart of the CBO Long Term Budget Outlook here. You can download the data and also view CBO Long Term Budget Outlooks going back to 1999.